Issued at Premium and Redeemed at Par

Q. Under which main head and sub-head of Equity and Liabilities part of the Balance Sheet are the following items classified or shown:

(i) Bonds;	(ii) Debentures
(iii) Public Deposits;	(iv) Capital Redemption Reserve;
(v) Forfeited Shares Account:	(vi) Sundry Creditors; and
(vii) Interest Accrued but Not Due on Debentures?

Q.

The main objective of providing depreciation is

Q.

Q. Securities premium account is a/an account.

1. asset
2. reserve
3. liability
4. expense

Q.

Beeta Ltd, issued 5, 000, $9\%$ debentures of Rs 500 each. Pass the necessary journal entries for the issue of Debentures in the books of the company in the following cases:

(i) When debentures are issued at $10\%$ premium and redeemable at par.

(ii) When debentures are issued at par and redeemable at $10\%$ premium.

(iii) When debentures are issued at $5\%$ premium and redeemable at $10\%$ premium.

(iv) When debentures are issued at $25\%$ to the vendors for machinery purchased for Rs 6, 25, 000.

Q.

Loss on issue of debentures is a capital loss and it is to be written-off gradually charged to ___

1. Securities premium

2. Statement of profit & loss

3. None of these

4. Either Statement of profit & loss or Securities premium

Q.

Y Ltd issued 2, 000, 6% Debentures of Rs, 100 each payable as follows

Rs. 25 on applications; Rs. 50 on allotment and Rs. 25 on First and Final call.

Q.

G Ltd issued 75, 00, 000, 6% Debentures of Rs.50 each at par payable Rs.15 on application and Rs. 35 on allotment, redeemable at par after 7 years from the date of issue of debentures. Record necessary entries in the books of company.

Q.

What is meant by ‘Premium on Redemption of Debentures’?

Q.

Spencer Paints Ltd. was registered with an authorised capital of Rs. 50, 00, 000 divided in 5, 00, 000 equity shares of Rs.10 each. Company issued 20, 00, 000 equity shares at a premium of Rs.3 per share, payable as follows: Rs 4 on Application, Rs 5 on Allotment (including premium), Rs 2 on First Call and Rs 2 on second and Final Call.

All shares were subscribed and all the money was duly received. Share issue expenses amounted to Rs 75, 000 which were fully written off against securities premium.

Prepare necessary Journal Entries and Bank Account.

Q.

T Ltd offered 2, 00, 000, 8% Debentures of Rs.500 each on June 30, 2002 at a premium of 10% payable as Rs. 200 on application (including premium) and balance on allotment, redeemable at par after 8 years. But application are received for 3, 00, 000 debentures and the allotment is made on pro-rata basis. All the money due on application and allotment is received. Record necessary entries regarding issue of debenture.

Q.

Securities Premium Reserve Account is debited by the amount of premium that has not been received on forfeited shares. Is it correct and why?

Q.

Tulip Ltd. issued Rs 4, 00, 000 $9\%$ Debentures of Rs 100 each on April 1, 2014 at a premium of $6\%$ redeemable at a premium of $10\%$ on 31st March, 2018. Assume that required investment was made in $10\%$ Government Securities on April 30 of the financial year in which redemption is due. Debentures were redeemed on the due date.

Pass journal entries at the time of Issue and Redemption of Debentures.

Q.

The premium on issue of debentures is called ___

1. None of these

2. Securities premium

3. Premium on issue of debentures

4. Debenture premium

Q. X Ltd redeemed 1, 000, 12% debentures of Rs. 50 each by converting them into 15% New Debentures of Rs. 100 each Journalise.

Q.

Securities premium account is a/an _______.

1. Reserve

2. Liability

3. Asset

4. None of these

Q.

How would you deal with ‘Premium on Redemption of Debentures’?

Q. Objective type questions.
Answer in are sentence only.

What is meant by ‘Premium on Redemption of debentures?

Q. Give a word / term / phrase which can substitute each of the following statements :

The account which shows revaluation of assets and liabilities.

Q. is an assessment of the borrower that determines whether the borrower will be able to pay the loan back on time, as per the loan agreement.

1. Borrower rating
2. Credit rating
3. Agreement rating
4. Loan rating

Q. In the absence of any information to the contrary, premium on issue of debentures is called & adjusted at the time of allotment.

1. True
2. False

Q. A draws a bill of exchange of $Rs.4000$ on B on the $15thAugust$ payable $30$ days after date. The due date of the bill will be _________.

1. $17thSeptember$
2. $16thSeptember$
3. $15thSeptember$
4. $18thSeptember$

Q. equity means the total liabilty of the company exceeds the total assets.

1. Positive
2. Negative
3. Distributed
4. Equilibrium

Q.

Safety Locks Ltd, issued to public 2, 500 12% Debentures of 100 each at 10% premium redeemable at par. What amount shall be repaid to debentureholders?

1. None of these

2. 2, 75, 000

3. 2, 50, 000

4. 3, 00, 000

Q. What is the difference between the revaluation account and profit and loss adjustment account

Q.

When amount received from debentureholders on allottment is more than their face value/nominal value, they are said to be issued at ___

1. All of these

2. Premium

3. Discount

4. Par

Q.

Safety Locks Ltd, issued to public 2, 500 12% Debentures of 100 each at 10% premium. What shall be the amount of premium ?

1. 30, 000

2. None of these

3. 50, 000

4. 25, 000

Q. A statutory auditor reports to____________.

1. Debenture holders
2. Central Government
3. Board of directors
4. Share holders

Q. Which of the following accounts can be transferred to Capital Redemption Reserve account?

1. General reserve account.
2. Forfeited shares account.
3. Profit prior to incorporation.
4. Securities premium account.

Q. Overdraft as per pass book of P&Co. was Rs.$60,000$.
-The credit side of bank column of cash book was under cast by Rs.$200$.
-Interest on bank loan Rs.$4,000$ and bank charges of Rs.$1,150$ were not recorded in cash book.
Overdraft balance as per cash book should be _________.

1. Rs.$54,650$
2. Rs.$57,350$
3. Rs.$65,350$
4. Rs.$56,950$